But,
generally, the discussion about inequality has been missing
half of the puzzle.

On the one hand, it`s safe to say that
over recent decades, thevery
rich have gotten very much richer.

The
farther up the pyramid you are, the faster the growth has
been. The rise in income has been slower for the top ten
percent than for the top one percent, and the top one
percent has lagged behind the top 0.1 percent.

And when
the statistical equivalent of an electron microscope comes
along, we`ll probably see that the top 0.1 percent have had
good cause to rue how slowly their wealth has mounted
compared to the skyrocketing fortunes of the top 0.01
percent.

On the other hand, for most American and
above all the poor,incomes
have stagnated in inflation-adjusted terms—and for
significant numbers, actuallyfallen.
The influx of
poor, unskilled immigrants from abroad has certainly
swelled the number of people at the bottom of society and
exacerbated competition for jobs and housing among them.

Additionally, it`s notable that the rich have learned how to
use the poor as symbols to rationalize whatever they want to
get away with.

Most public discussions of inequality have
been of limited utility because the fundamental measure is
not income or wealth, butlong-term standard of
living. And that has two halves: how much you have to
spend and how much whatever you spend it on costs.

Few
commentators have thought systematically about the second
half of the equation—the cost of living—even though we all
obsess over it in our own lives.

For instance,wages
for high school dropouts are similar in California, which
has the highest percentage of immigrants, to wages in states
with fewer immigrants.

But that doesn`t prove that immigration
has little impact on the standard of living among our less
fortunate fellow citizens. The
cost of living in California is 48 percent higher than
in, say,
Tennessee, a state with few immigrants. A key factor:
the cost of housing in California is 138 percent higher than
Tennessee. Land prices are driven by supply and demand.
Therefore, when the population goes up due to immigration,
the price of land goes up.

In this
article, I focus on the impact of the growing inequality at
the top and bottom of society on the cost of middle class
life.

Let`s
look at three major cost components of middle class life:
medical care, housing, and education.

Medical Care

What is the impact of increasing economic
inequality getting on the cost of medicine? Are the
ultrarich rapaciously bidding up the price of, say,
chemotherapy the same way they have bid up the price of
Gustav Klimt paintings?

Nah, not really.
Chemotherapy is not something anybody wants to want to
hoard all for himself. Trust me.

In fact,
plastic surgery, notoriously the most discretionary item
in medicine, has gone up less in price than most everything
else has.

Some—but not all that much. In 21st
Century America, the superrich generally don`t like to live
like
William Randolph Hearst inHearst Castle,
each on their own lonely mountains. They tend to crowd in
near others of their rarefied ilk. Hence, they often take up
less space than you might imagine.

In Manhattan, the rich stack themselves on
top of each other. In Los Angeles, the median celebrity
whose home buying or selling is deemed worthy of theLos Angeles Times`“Hot
Property“ real estate porn column lives on roughly
one or two Southland acres.

The rich
do often own huge vacation and investment properties in
scenic locations. Yet, those are typically too remote from
jobs, too laden with environmental restrictions, or in too
precipitous locations to be easily subdividable into middle
class neighborhoods.

Education

Finally,
what about education? Do the fantastically wealthy crowd out
the middle class?

To some
extent, yes. I have been informed by several reliable
sources that a discreet donation of
$5 million to Harvard can go a long way toward moving
one`s scion from the admissions waiting list to the accepted
list. Likewise, in Manhattan, a sizable gift can help get
your kid into a
fashionable kindergarten.

Of
course, we all know that if you want to play the social
climbing game, there`s no end to how much you can pay. But
what if you don`t particularly care about climbing up—you
just don`t want your kids to be dragged down? In that case,
the rich don`t matter as much. Do middle class parents have
to pull their kids out of the schools that, say,
James Cameron`s kids attend so they can learn? Do
roving gangs of Bill Gates`s kids keep your kid from
shooting baskets at the
local park?

Probably
not.

Now,
think about the costs imposed on the middle class by the
bottom of society—a bottom that has been greatly inflated in
relative numbers by immigration policy.

Medical Care

Do poor people not get chemotherapy when
they get cancer? Of course they do. We don`t live in some
fictional
Ayn Rand society. Poor people generally get cheaper,
lousier health care than rich people, but they still get it.
The overall cost of health care to the economy is more
proportional to the number of people within the borders than
to their ability to pay.

Under whatever system of health finance
that eventually evolves, those who can afford to pay will,
one way or another, subsidize the medical care of those who
can`t, just as they do now. Currently, that shows up as
taxpayer subsidies to the Emergency Rooms that the indigent
poor use as a primary health care supplier, higher insurance
premiums as hospitals pass through unreimbursed costs,
and/or outright closure of Emergency Rooms and even
hospitals.

The bulk of taxes are paid by the bulk of
people i.e. the middle class. And it is
middle class communities, and their
hospitals, that are the first to experience immigrant
invasion.

Housing

What about housing? Do poor people take up
space? Yes, in fact, more than you would think. The
essential problem with being poor in 21st Century America is
less that you can`t buy enough stuff and more that you can`t
afford to get away from other poor people. Those who can
afford to move away from the poor, do, driving up housing
costs elsewhere. That sections of
Detroit are reverting to forest, while the Detroit
suburbs are booming, is only the most extreme example of the
centrifugal impact of the poor. In Memphis, tearing down
downtown housing projects and giving the poorSection 8
rental vouchers made downtown safe for the affluent, but
simply drove crime into the inner suburbs.

Moreover, it has been national policy for many years to
disperse the poor from the inner cities. In California
in the last decade, easy credit from Countrywide and the
like generated a rolling exodus outward from South Central
Los Angeles into the exurbs and even into Arizona and
Nevada, as zero down payment mortgages gave countless people
hope that they could get their kids into a school district
away from kids like …
their kids.

Education

Unfortunately, as
Buckaroo Banzai pointed out,“No matter where you
go, there you are”. When
people with no money started buying en masse into exurban
Southern California neighborhoods with homes“worth” a half
million dollars because of their“good schools”,
those schools were suddenly not quite so good anymore. And,
very suddenly, those homes weren`t worth a half million
dollars anymore, contributing to the financial crash of
2008.

All of
which does not mean, however, that the rich have no share in
the blame for the costs the poor impose upon the middle
class.

As Rawlie Thorpetells Sherman McCoy
in Tom Wolfe`s novel
Bonfire of the Vanities,“If you want to live
in New York … you`ve got to insulate, insulate, insulate.”
The increase in income and wealth inequality means the rich
are both more insulated from the problems of ordinary
Americans. And, oddly, they are more influential over the
media.

In the mid-20th Century, the press was
more skeptical of the plutocrats because the class conflict
was so apparent in how they dressed, spoke, and behaved. In
the His Girl
Friday era, the rich put on pompous upper class
manners, while reporters indulged in the cynicism of the
socially marginal.Ben Hecht,
a Chicago reporter turned Hollywood screenwriter,
described his first view of a newsroom in 1910:“hats tilted, feet up
on top of typewriters, faces breathing out liquor fumes like
dragons”. Hecht
summarized the reporters of his youth:

“They sat, grown and
abuzz, outside an adult civilization, intent on breaking
windows. There was, I am sure, neither worldliness nor
cunning enough among the lot of us to run a successful candy
store. But we had a vantage point. We were not inside the
routines of human greed or social pretenses. We were without
politeness. … Our noses were full of the odors of chicanery
and human fatuousness.”

Both the rich and the reporters have the
same upper middle class casual manners. The rich don`t dress
for dinner in
boiled shirts,
dickies, and watch chains anymore, while reporters don`t
wear hats indoors., Everybody affects an easy equality—so
it`s simple for the billionaires to seduce the media by
graciously treating them, during interviews or at the
annual Davos conference for plutocrats and pundits, as
equals.

Of
course, they aren`t equal. But this flattery that the
zillionaires direct at the journalists, this pretense that
we`re all in the same social class—the educated
enlightened—makes it easier for the media to endorse the
agenda of the rich.

Thus inWaiting for
Superman, the
new documentary about school reform that has been widely
celebrated in the elite media, the conventional wisdom
about the necessity of spending vastly more on
fixing bad schools is espoused onscreen by various
journalists, educators, and Bill Gates. A Rip Van Winkle who
had been asleep from 1935 wouldn`t be able to tell from
dress or speech which of the many interviewees clad in
Dockers khakis is(or ratherwas)the
world`s richest man.

Not surprisingly, the documentarian,Davis
Guggenheim, shows no cynicism whatsoever about the
altruistic purity of Gates`s motivations. In fact,
Guggenheim is happy to relate Gates` excuse for why
Microsoft hired all those
H-1B visa programmers from India instead of hiring
Americans. You see, Gates just had to import foreigners
because American schools were so bad that there weren`t any
programmers left in America. Hehad to!

In a Ben Hecht-scripted movie, a reporter
would have whispered out of the side of his mouth to another
reporter that, sure, Gateshad to hire cheap
labor from abroad to boost his net worth from $49 billion to
$50 billion.

But,
that kind of cold-eyed realism toward the rich on the part
of the press has largely given way to warm, fuzzy feelings
of class solidarity—the
assumption that we elites are all working to help the poor,
unlike those
horrible bigots in the middle.

In a famous formulation, Yale economist
William Graham Sumner described modern social policy as a
process whereby “A
and B put their heads together to decide what C shall be
made to do for D.” He described C as
“The Forgotten Man.”The American middle class
continues to be forgotten. But what`s new here is that B is
our supposedly independent Main Stream Media.